Insights

Investment Insights by our experts and thought leaders

Global Fixed Income & Credit Outlook - June 2018

Global growth is becoming increasingly less synchronized, with the Eurozone, Japan and UK showing some moderation in growth, whilst the US remains relatively robust.

Japan Equity Monthly - June 2018

The Japanese equity market declined in May, with the TOPIX (w/dividends) dropping 1.67% on-month and the Nikkei 225 (w/dividends) falling 1.18%.

Where Are We With Corporate Governance In Japan?

Japan’s corporate governance reforms have progressed slowly but surely and the recent revision of the code will add momentum for the unwinding of cross-shareholdings.

Forbes: Japan's 'Show Me The Money' Corporate Governance Update

Japanese profit margins continued roughly flat in the 1Q, but at a high plateau due to improved corporate governance over the past years. With global economic growth pushing up the top line, profits should continue to rise significantly in the quarters ahead.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

China MSCI Inclusion Has Room to Grow

The much anticipated MSCI A Share inclusion happened on 31 May 2018 and will pave the way for further internationalisation of China’s stock markets.

The Case for Private Infrastructure Investing

We believe that long-term oriented institutional investors could find investing into private infrastructure via actively managed funds an attractive investment proposition.

After depreciating for over 18 months, the US dollar has managed to make a comeback, recouping its 5% YTD loss in a matter of weeks. Coupled with 10 year US Treasury (UST) yields hovering around 3%, this has put pressure on Emerging Markets (EM).

Thoughts From the Journey

It has often been the conversations I have had with the people along the way which I have found most helpful when it has come to making investment decisions. This article aims to tell some of their stories and how apparently chance encounters can help generate investment ideas.

Asian Equity Monthly Outlook - May 2018

The MSCI AC Asia ex Japan (AxJ) Index gained 0.7% in USD terms. Trade jitters receded following China’s commitment at the Bo’ao Forum to further open up the economy to foreign businesses.

Asian Fixed Income Monthly Outlook - May 2018

US Treasuries (USTs) experienced a sharp sell-off in April as yields rose about 10 to 24 basis points (bps) across the curve. Trade war fears between US and China receded, with Chinese President Xi Jinping's commitment to further open up the economy to foreign businesses.

Forbes: The Contours Of A China-U.S. Agreement

Recent events have shed some light on a likely China-U.S. agreement fairly soon. Key to such was Trump’s order for ZTE’s sanctions to be lightened so that it can remain in business.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

Japan Equity Monthly - May 2018

The Japanese equity market rose in April, with the TOPIX (w/dividends) climbing 3.55% on-month and the Nikkei 225 (w/dividends) rising 4.73%.

Global Fixed Income & Credit Outlook - April 2018

The broad-based synchronized growth story continued to soften through March, as consumers pared back purchases in the face of rising prices.

China Brands Muscle MNCs Out of Home Turf

Chinese companies are now a force to be reckoned with on their home turf – a market which used to be dominated by foreign brands. This report looks at how the change has come about and where Chinese brands are headed.

As much as we would prefer to discuss market fundamentals over the trials and tribulations of the current US Administration, it has been largely unavoidable in this first quarter of 2018.

Beijing conference takeaway: It is clear that while China is set for lower economic growth this year, this decrease represents a welcome central government focus on creating a cleaner, more efficient economy.

Asian Equity Monthly Outlook - April 2018

The MSCI AC Asia ex Japan (AxJ) Index declined 1.5% in USD terms, amid significant volatility across global markets. Concerns about a global trade war and a sell-off in the US tech sector weighed heavily on sentiment.

Asian Fixed Income Monthly Outlook - April 2018

US Treasuries (USTs) traded in relatively tight range in March, with the yield curve bull flattening. The US Federal Reserve (Fed) raised interate rates by 25 basis points (bps), and signalled it could lift rates at a marginally more aggressive pace in coming years.

Japan Equity Monthly - April 2018

The Japanese equity market fell in March, with both the TOPIX (w/dividends) and the Nikkei 225 (w/dividends) dropping 2.04% on-month.

Forbes: 2% U.S. Core Inflation Achieved Very Early

In its March meeting, the midpoint of the FOMC’s projection for the Core PCE price index did not hit 2.0% until 2019. However, it seems likely to occur in the upcoming March reading. Meanwhile, today's Core CPI already exceeded 2.0%.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

How ASEAN's 3Rs Can Overcome Trade Wars

Our portfolio manager in Singapore explains why ASEAN might well benefit from the current US-China trade tensions and how the region’s three main strengths should keep economic growth strong.

Forbes: Trump Is Going To Hate This Trade Data

Not only did the US trade deficit expand in February, it showed particularly disturbing trends regarding the Eurozone and China.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

China's Move from Factory of the World to Silicon Valley of the East

With its advantages of a vast talent pool, financing and market access, China has most of the ingredients needed to transform into the “Silicon Valley of the East”

Global Ramifications of the Eurozone’s Huge Trade Surplus

Many economists and currency analysts, after years of ignoring such “old fashioned” indicators, are now talking about the massive trade surplus that the Eurozone enjoys with the world, but in particular with the US.

Markets continue to come to terms with the return of higher volatility, triggered ostensibly by fears of inflation and the unwinding of highly leveraged short volatility positions at the beginning of last month.

Forbes: Revisions Show U.S. Industrial Mini-Recession In 2015

Actually, it has not been one long expansion since 2009, as we now can see how the slumping oil price caused a mini-recession a few years back.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

LatAm Elections: The Lure of the Left

Our London-based Emerging Market fixed income analyst predicts increased volatility ahead for Latin American markets due to the threat of Leftist election victories this year, but that pro-market reforms will still progress.

House View: Continued Global Economic and Equity Reflation

Our updated view remains positive on the global economy and equity markets even as global bond yields rise a bit further. Our SPX target remains near 3000 by year end, with impressive gains elsewhere too.

Global Fixed Income & Credit Outlook - March 2018

A broad-based synchronized recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Asian Equity Monthly Outlook - March 2018

The MSCI AC Asia ex Japan (AxJ) Index declined 5.0% in USD terms, as better US economic data prompted worries about inflation and expectations of faster interest rate rises from the Federal Reserve.

Asian Fixed Income Monthly Outlook - March 2018

In February, US Treasuries (USTs) succumbed to a further sell-off, with yields rising across the curve prompted by better US economic data.

Japan Equity Monthly - March 2018

The Japanese equity market fell in February, with the TOPIX (w/dividends) dropping 3.70% on-month and the Nikkei 225 (w/dividends) tumbling 4.41%.

Japan’s “Show Me the Money” Corporate Governance

In my view, Japan is the only major country that is going through a structural improvement in corporate governance, and, thus, deserves special attention by global investors.

In our 2018 outlook, we made the case for rising volatility as central banks across the developed world slowly remove the stimulus punch bowl, but few would have imagined volatility spiking with such a vengeance as it did in recent weeks.

Italian Elections: More of the Same Political Dysfunction

Poor economic and fiscal policies are, and will likely be, a recurring theme in Italian politics. However, from a trade perspective, we see Italy to remain a good carry/spread trade for at least the next twelve months against a backdrop of improving GDP growth in 2018 and 2019.

Global Fixed Income & Credit Outlook - February 2018

A broad-based synchronized recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Japan Equity Monthly - February 2018

The Japanese equity market rose in January, with the TOPIX (w/dividends) climbing 1.06% on-month and the Nikkei 225 (w/dividends) rising 1.47%.

Asian Equity Monthly Outlook - February 2018

The MSCI AC Asia ex Japan (AxJ) Index returned 7.6% in USD terms in January, amid optimism about solid economic growth and corporate earnings. Asian currencies generally strengthened against the USD.

Asian Fixed Income Monthly Outlook - February 2018

There was a sharp rise in US Treasury (UST) yields in January on the back of positive macro news, steady rise in oil prices and speculation that central banks in developed markets will start winding back on stimulus measures.

Forbes: 2% U.S. Core Inflation In Sight

Today's very high Core CPI result is one more indication that inflation is rising.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

Forbes: The BOJ: Kuroda Again, But What's New?

The Japanese media are widely reporting that Governor Kuroda will be reappointed, which surprises very few people. Whether he wishes to finish his new five-year term is open to question, so the choice of Deputy Governor will likely be important.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

Australian Household Debt — The Economic Cost of High House Prices

Over the past 15 years Australian house prices have been on an incredible run, resulting in Australian households becoming some of the most indebted in the world. So what is the economic cost of Australia’s sky high property prices and what could it mean for property prices in 2018?

Forbes: The New Fed And Why The MBS Market Will Likely Suffer

Both Fed candidates support tapering MBS holdings faster than the current plan. This would likely raise mortgage rates and tame US housing prices, which are likely rising too fast for comfort.

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

MSCI Inclusion of Domestic ‘A’ Shares is China's Grand Entrance onto World Stage

Imagine a day when "Asia ex-China" portfolios are the norm. We think this is not too far-fetched an idea.

Forbes: Why Loretta Mester Should Be Fed Vice Chair

“Even though Mester is often perceived as a hawk, she is quite centrist in the current environment.”

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

2018 Japan Equity Outlook

With the Nikkei Index breaching the 24,000 mark, its highest level in 26 years, Japan appears to have put its “lost decade” of growth well behind it.

Over the past few years, one of the main risks that concerned our team was the possibility that asset classes could become positively correlated.

Global Fixed Income & Credit Outlook - January 2018

A broad-based synchronised recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.

Asian Fixed Income Monthly Outlook - January 2018

As widely expected, the US Federal Reserve (Fed) raised interest rates by 25bps in December, its third rate hike this year. It also raised its GDP forecast for 2018.

Asian Equity Monthly Outlook - January 2018

The MSCI AC ex Japan (AxJ) Index returned 2.7% in USD terms in December, outperforming the MSCI AC World index which returned 1.4%.